As many as 4.4 lakh residential units remain unsold across key cities of India at the end of 2017. The unsold inventory of completed (ready – to – move in) residential units is estimated at 34,700 units in the top cities of India. Delhi – NCR has the highest volume at around 150,654 units that remained unsold in 2017, while Chennai had the highest percentage of completed unsold inventory at close to 20 percent, the report said.
It also noted that Kolkata had the lowest volume of unsold inventory at approximately 26,000 units.
A significant volume of unsold inventory will ensure that the capital values across most markets will be kept buyer friendly to ensure sales velocity. Also, with a slowdown in launches, across the markets, we can expect to see more unsold inventory to get absorbed in the next few quarters. As a trend, end users have been inclined to enter the market closer to date of completion, which will further accelerate absorption of the unsold units. Capital values remain stable with a downward bias across most markets making it buyer favourable, the report said.
For Delhi – NCR, Gurgaon saw only limited unsold inventory, most of which was situated in the peripheral locations of the city. Significantly a very limited amount of the unsold inventory was in the completed category, which was less than 4% of the total unsold residential units in the location. The rest of Delhi NCR including Delhi, Faridabad and Ghaziabad saw unsold inventory of approximately 37,000 units, the report said.
“The residential market has been on a wait and watch mode for some time on account of many structural changes that have happened. From the beginning of 2016, the sector has witnessed changes like RERA, Demonetisation and GST, impact of which is not completely known. These have also led to a general slowdown in overall construction activities. On the flip side, demand too has been slow on account of these changes. We expect sales velocity to start picking pace in the second half of the year mostly on account of stable prices making entry attractive,” said Ramesh Nair, CEO & Country Head, JLL India.
Chennai witnesses highest percentage of completed unsold inventory
The highest volume of unsold inventory was in Chennai has been the highest at close to 42,500 units of which nearly 8,500 units are in ready to move in conditions. This is exerting pressure on the market to keep its capital values end user friendly to attain sales velocity. A close scrutiny of the data shows that most of the unsold inventory is in locations that were impacted in the deluge of December 2015, which drastically brought down the attractiveness of such projects. Having said that, Chennai has seen strong trend in the uptake of commercial office space in the last few quarters indicating a healthy future trend. If the trend continues to remain strong, we should expect to see a simultaneous uptake in residential sector, albeit, the trend usually takes a few quarters to follow.
Bengaluru has close to 70,000 unsold units of which close to 10,000 are ready residential units
Bengaluru, which recorded nearly 70,000 units has seen an influx of new launches in the last few quarters of 2017 backed by a strong and stable economic condition. 2017 alone saw launch of over 20,000 new units. The scale of the market is large and is driven by end users therefore, a large part of the unsold inventory is situated in projects in peripheral locations or projects launched by companies that do not have a strong track record. Further, with the market still working out the details of Karnataka RERA, there is uncertainty from users to enter the market before the enforcement of RERA.
Thane saw lowest unsold inventory with only 163 completed units remaining unsold in 2017
For Greater Mumbai, Thane saw the lowest volume of unsold inventory with approximately 12,500 units almost entirely in under construction. Completed unsold units are at a very low 163 units. Thane has been seeing strong traction amongst end users due to high quality of construction, ease of commute and a general upgrade in the social infrastructure which has been proportionate to the growth of the location. Navi Mumbai on the other hand recorded over 24,000 unsold units of which over 10% (2,654) are in completed projects. Most of the projects launched in this cardinal of the city are in the peripheral locations of Kharghar and Panvel which are mostly investor driven markets with much lower end – user activities. Mumbai city has recorded close to 50,000 unsold units mostly in the under construction projects. Traditionally, Mumbai markets see sales velocity pick up closer to completion.
Pune records unsold inventory as 36,000
Pune, which has emerged as a strong and vibrant residential market, saw a total of 36,000 unsold units, hearteningly recorded only 500 units as completed and unsold. This is a testament that the market is growing at an incredible pace, in terms of construction activities. However, being an end user market, Pune remains largely price sensitive. It is estimated that most of the unsold inventory are in projects that are in peripheral locations which are futuristic and targeted towards investors.
Kolkata and Hyderabad saw unsold inventories of approximately 26,000 and 28,000 respectively. Hyderabad market has been buoyant with strong trends in the office sector, leading to optimism amongst development companies to pick pace of residential construction activities. Hyderabad is going through a revival which is likely to lead to a growth in sales of residential units. Thus, we can see the velocity increase for Hyderabad in the latter part of the year. Kolkata, on the other hand, has been a strong investor market, where majority of the buying is by non- residents that are looking for investment or for usage post retirement. Majority of the launches are in the newly developed locations of the city of New Town Rajarhat which is an upcoming business location.Source- Moneycontrol.com
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